Mesothelioma (Insurance Premiums)

Ian Lavery Excerpts

Wednesday 29th January 2014 Westminster Hall

[Andy McDonald (Middlesbrough) (Lab)]

It is an honour to open this important debate and to serve under your chairmanship, Mr Hollobone. I draw Members’ attention to my entry in the Register of Members’ Financial Interests.

It would be remiss of me to start my speech without paying tribute to my right hon. Friend the late Paul Goggins, who was such an assiduous advocate for mesothelioma sufferers and their families. I attended his funeral the week before last at Salford cathedral with many other colleagues, and had a conversation with the hon. Member for Foyle (Mark Durkan), in which he reflected on Paul’s innate decency and many wonderful qualities. He summed up Paul’s parliamentary contributions by saying that his arguments were well marshalled and his responses well mannered. I will strive for those high standards today, but I fear I will never be able to emulate such a brilliant parliamentarian.

In essence, this is a mercifully simple matter, but perhaps a few moments spent establishing the background are warranted. We are here to address provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012—LASPO—that relate to mesothelioma cases. The relevant background is that changes were made by LASPO to the way in which the generality of legal cases were funded.

I practised for many years as a solicitor with Thompsons, and before arriving in this place in December 2012, headed up a specialist unit looking after those who suffered catastrophic injuries, including brain and spinal chord injuries, and sadly, on too many occasions, cases resulting in fatalities. I also had the privilege of representing members of the armed forces who sustained serious injuries in the service of their country. I never did represent those suffering from asbestosis or mesothelioma, but I had the privilege of working alongside some wonderful colleagues who devoted their professional, and often significant parts of their personal, life to the service and representation of those suffering from this most dreadful of diseases and their families. I pay tribute to the tireless work of my former colleague, Ian McFall, who is not only an international authority in the field of mesothelioma litigation, but has been, and continues to be, a wholly committed advocate of the cause.

With the move away from legal aid support for personal injury cases, and with such state support being removed altogether, the era of the conditional fee agreement came into being. I cannot count the number of conversations I had while in practice over many years, in which I tried to explain that the description of so-called “no win, no fee” agreements was wholly inadequate. The basis of conditional fee agreements, as they are properly termed, was that if a claimant was unsuccessful, he or she would not face a bill for either their costs and disbursements or those of their opponent. Any risk was principally borne by the claimant’s lawyers. Their reward was that when they succeeded for their clients, they benefited from an uplift on their costs—a success fee paid for by the unsuccessful defendant. All that was designed to take account of other cases that were unsuccessful.

The structure was underpinned by insurance: in the event of the claimant not succeeding, wholly or in part, that insurance would provide cover for the unrecoverable disbursements and the defendant’s costs. In the absence of suitable pre-existing, before-the-event legal expenses cover, that policy would be arranged on an after-the-event basis, known as ATE. The insurance premium was borne by the unsuccessful defendants in cases where the claimant won. In successful cases, the defendant bore a success fee and the ATE premium.

All that changed with LASPO. In short, from 1 April 2013, in return for a 10% uplift on the damages paid, the principle of recovering success fees and ATE premiums was extinguished, and those cost items would now be paid by the claimant; that represented a significant erosion of a claimant’s damages. It was argued in this place that mesothelioma cases should not fall foul of those provisions, and that those cases should be exempt. It was entirely right to have those exemptions in that Act in section 44, which concerns success fees, and section 46, which relates to after-the-event insurance premiums, and the reason for that was eloquently summed up in recent times by Paul Goggins:

“An amendment was passed in the House of Lords that exempted mesothelioma sufferers. Hon. Members from both sides will recall our vigorous debates in the House of Commons over the issue and the strong sense that it was repulsive that people who are given a diagnosis of mesothelioma and know that they might have only months to live might have to give up 25% of their damages to pay a success fee to their lawyers and would therefore have to shop around to get the best deal from those who might represent them. The idea was repulsive.”––[Official Report, Mesothelioma Public Bill Committee, 12 December 2013; c. 93.]

The idea remains repulsive, and no case has been made for changing the position. A claimant in these dire circumstances should be focusing on the quality of representation and nothing else. The exemption, securing 100% recovery, allows that to happen.

Section 48 made it clear that there would be a review, in that sections 44 and 46 could not be brought into effect in cases of diffuse mesothelioma until such time as the Lord Chancellor had

“carried out a review of the likely effect of those sections in relation to such proceedings, and…published a report of the conclusions of the review.”

The Government will doubtless point to the consultation launched in July 2013 on mesothelioma claims. The relevant part is chapter 4, which runs to three pages and asks:

“Do you agree that sections 44 and 46 of the LASPO Act 2012 should be brought into force in relation to mesothelioma claims, in the light of the proposed reforms described in this consultation, the increase in general damages and costs protection described above, and the Mesothelioma Bill?”

With respect, that can hardly be properly described as a review, but more importantly, that chapter dealt with one of many matters consulted on, including fixed costs, secure gateways and new protocols, all of which were abandoned. It simply cannot be properly described as a review; equally, what happened subsequently was not by any means a report.

What we have had is an announcement, by way of a written ministerial statement from the Under-Secretary of State for Justice, the hon. Member for North West Cambridgeshire (Mr Vara), who announced that the Government

“have concluded that they intend to apply sections 44 and 46 of the LASPO Act to mesothelioma cases”.—[Official Report, 4 December 2013; Vol. 571, c. 56WS.]

That cannot by any stretch of the imagination amount to a credible review or report as specified by section 48. Statute says that those things simply have to happen before the relevant sections can apply to mesothelioma cases.

To have introduced a new regime in April 2013 with the exceptions, and then to consult on whether the exceptions should still apply, alongside a host of other matters in relation to mesothelioma claims, in July 2013 was simply ludicrous. There were just three months between the introduction of the new regime in April and the July review; that was simply far too soon for any proper assessment to have been made of the likely effects of sections 44 and 46 on mesothelioma claims. No one can tell at this stage how much clients will be charged by solicitors under LASPO. The situation is developing as the market adapts. The same can be said of the cost of ATE insurance. The Government are jumping the gun. They need to pause and commit to a genuine process of review.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on bringing this very timely debate to the Chamber. With regard to the section 48 review, it is generally thought that it is pure poppycock and nonsense, although probably not in legal terms. Would it not be better to abandon the section 48 review and instigate a thorough review of the effects of sections 44 and 46 on mesothelioma claims?

[Andy McDonald]

I am grateful to my hon. Friend. His intervention is apposite. There is only one respect in which I would slightly disagree with him: he says that the review is poppycock, although perhaps not in the legal sense, but we may find that there are legal consequences to it. I am of the view that it does not withstand scrutiny as a proper process. No doubt we will return to that.

Making these changes at this pace makes it abundantly clear that the Government had made their mind up way before April 2013 that these exemptions would not last any time at all. Thereafter, to try, in some tortured way, to create a link between the mesothelioma scheme as laid out in the Mesothelioma Bill and the provisions in LASPO is simply to conflate unconnected matters. If there was one American blues artist who epitomised the approach of the Government on this issue, it would be the inimitable Muddy Waters.

--- Later in debate ---

[Ian Lavery (Wansbeck) (Lab)]

It is, as ever, a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Middlesbrough (Andy McDonald) on securing this important debate.

Before Christmas, I was a member of the Public Bill Committee that scrutinised the Mesothelioma Bill, and it really was informative. The Labour Opposition and I missed great opportunities to try to get the rightful compensation for people who have suffered greatly as a consequence of mesothelioma. As I look around the Chamber, I see people, including the hon. Member for Chatham and Aylesford (Tracey Crouch), who clearly understand how this disease affects individuals. It is as vicious as any work-related condition that anyone could experience. We must never forget the impact it has had on families and friends.

Mesothelioma is one of those diseases where once someone has been diagnosed, the prognosis is basically death within—if they are lucky—18 months. As politicians of whatever party—red, blue, yellow or whatever— we have a duty to look after people whose only crime was going to work in unsafe conditions. At the time they were very much unaware of how unsafe the conditions were. We heard tales of people—young people; apprentices—making asbestos snowballs at work and throwing them at each other, not knowing that in future it could have a dramatic impact on their lives and those of their families. The issue is really, really serious.

I cannot continue without paying tribute, as has each Member who has spoken, to the late Paul Goggins. He made a fantastic contribution to the Mesothelioma Bill Committee and was for a long time a fantastic campaigner on similar issues, particularly those related to cancer. Of course, he was especially dedicated to mesothelioma, and throughout our consideration of the Bill he was at the front, together with the Labour Front-Bench team, fighting for what was right and for justice for these people.

The Mesothelioma Bill was a missed opportunity. Once enacted, it will underpay people who are suffering—the victims. As the hon. Member for Chatham and Aylesford said, we must at all times “put the victim at the centre of the process.” Too many others have been involved, such as the insurance company that has led things from the front. During scrutiny of the Bill, the Minister in the Committee, the Minister of State, Department for Work and Pensions, the hon. Member for Hemel Hempstead (Mike Penning), said quite clearly that it was not a case of bringing the insurance companies to the table to discuss compensation; they had to be dragged there. The insurance companies have made fortunes—millions if not billions of pounds—from premiums. We must not forget that premiums were paid. It is not a case of insurance companies looking for finance that was not there: the premiums had been paid by the employers, and the insurance companies have paid out dividends to shareholders instead of keeping the money for compensating dying victims of mesothelioma.

We often forget the families. The cut-off date in the Mesothelioma Bill is July 2012. That means that millions—sorry, I am getting carried away with my figures—certainly hundreds if not thousands of people will miss out on any form of compensation. At best, the individuals affected will receive 75% of damages. It is beyond me why they have to accept that. If someone gets hurt and the employer accepts it, why should the insurance company demand that they get only 75% of what the injury is actually worth? That is absurd and should not be the case for this horrendous disease. At the same time as getting only 75% of damages, the benefits clawback is being pitched at 100%.

These people, who have suffered, are suffering greatly and will suffer in future, are confused. They are confused by our debating LASPO. These people are ill, their families are looking ahead to a lifetime without their loved ones, and they are trying to understand what LASPO and CFA mean. As politicians we should be above that. We should have ensured that the families came first, as the hon. Member for Chatham and Aylesford said. The families are not aware of what section 44 and section 46 mean. They have not got a clue and, let us be honest, they are not even bothered what section 44, section 46 and section 48 of the LASPO Act mean. What they want is justice for their families and for the person who sadly will be leaving the family within 18 months at best. The review is totally flawed. As I said in an intervention, the Government should abandon the section 48 consultation.

One reason I say that the review is fatally flawed is that the Government abandoned the consultation reforms that were relevant to sections 44 and 46. They conceded that the Mesothelioma Bill really has nothing to do with the effects of sections 44 and 46, but they said that it was always their intention to “synchronise” the section 48 review and the Bill.

[Kate Green]

Does my hon. Friend agree that that must be at best a quite cynical statement? The argument about the Mesothelioma Bill was that a deal was being negotiated with the insurance industry, and that it would not be possible to introduce a scheme to have effect prior to the conclusion of that deal on 25 July 2012. It seems that at the beginning of 2012, when the LASPO Act was passed, Ministers were envisaging a deal that did not exist, as the present justification for saying that the two can be synchronised. They cannot possibly have been waiting to synchronise with a deal that might never have come to fruition.

[Ian Lavery]

My hon. Friend has hit the nail on the head with that important point, which she raised during the progress of the Bill.

The second issue is the fact that the section 48 review did not ask respondents to make the case for the mesothelioma exemption. It asked if respondents agreed with the Government that the exemption should be lifted in the light of the consultation reforms, plus the CFA reforms and the Mesothelioma Bill. Had the Government asked for the case to be made, the recent legal ombudsman’s report on no win, no fee arrangements would have been most pertinent. The report states that the CFA agreements are not simple to understand and contain unclear terms and conditions, and that there is evidence of some lawyers failing to make clear the financial risks of CFA agreements and trying to pass on the risk to customers. That is precisely the situation that the Lords feared and would not tolerate for dying mesothelioma sufferers.

As it stands, the review is not based on the effects of sections 44 and 46 on mesothelioma claims. It is based on a reiteration of the Government’s intention to apply the CFA LASPO reforms to mesothelioma claims. That can hardly be described as a review. Members of Parliament should ask the Government to abandon the so-called review and seek a proper, fuller one.

[Andy McDonald]

Does my hon. Friend agree that the whole premise of the review is fatally flawed? It includes the question:

“Do you, agree that sections 44 and 46…should be brought into force in relation to mesothelioma claims, in the light of the proposed reforms described in this consultation”?

Those did not proceed; they were abandoned. Does not that put the skids under the entire project?

[Ian Lavery]

I fully agree with my hon. Friend about that—it is question 15 of the section 48 review. It is even more reason for us to seek agreement to the abandonment of the review, and to get to grips with the real problems cutting across the Mesothelioma Bill. MPs should ensure that the outcome of a proper section 48 review is brought before Parliament and not introduced via a commencement order, as the Government probably intend. [Interruption.] Someone has turned my telephone on during the debate, Mr Hollobone: I am sure I switched it off before. I apologise for that.

The legal aspect of the matter seems extremely complicated, and I make an appeal to politicians from across the Chamber. The legislation is not really what I or many other Labour Members wanted, but it is progress. It will mean that individuals can get some form of compensation through the scheme. We must put individuals at the heart of things—the sufferers: people who are losing their lives, and families who will lose loved ones within 18 months. Such things should be cleared pretty quickly, so that families will not be bogged down in legal problems, and will fully understand the compensation procedures they want to embark on. Even if there was 100% compensation for mesothelioma it would not be enough; there cannot be enough compensation for the loss of a breadwinner, father and husband, or mother and wife. There cannot be enough compensation for the loss of someone so important in family life.